Racing in a Wireless World
Thursday, March 10, 2005
10:00 a.m. - 11:00 a.m.

Mr. Scherf: In 1990, the TRA started a committee called the 1995 committee, and that was to introduce full-card simulcasting. There were a lot of obstacles. There were regulatory restrictions. There were tote restrictions. We needed to get a protocol in so that totes could speak to each other. We started with a basic premise in the utopian world. We wanted someone to be able to bet from anywhere on any race. The part we forgot is, with anyone, and that is what we are facing now. So many times everybody has had the wonderful experience in their own racetrack of watching someone in the stands, watching your races, and whipping out their cell phone, their wireless transmission device, and placing a bet with someone else, where you are only getting a percentage of the takeout, not your full share. Our next two speakers are going to talk a little bit about how we might tame that beast by using wireless to our own advantage. Our first speaker goes back a long time with simulcasting. As a matter of fact, when we had our first simulcasting conference 13 years ago, he spoke in Chicago. He has written articles for 18 years that have appeared in the Blood-Horse, Thoroughbred Times, and Hoofbeats. Stan says this is his sixth presentation to the Harness Tracks of America, and as I said, he was on the original agenda of the simulcast conference. His main area of expertise is high technology marketing strategy. He has written books and numerous articles on this and other business topics. He has served on the boards of private and public companies. Currently he is a visiting professor in the business school at the University of Akron in Ohio. He also is a lifelong horse racing fan. Please welcome Bill Shanklin.

William L. Shanklin: When I was a graduate student and a lecturer at the University of Maryland, thirty-some years ago, the state of the art in instructional aids consisted of a blackboard, chalk, and occasionally a movie projector.  One of the outstanding students at Maryland about that same time has succeeded spectacularly in spite of such low technology.  Chris Scherf was not in any of my classes, at least not to my knowledge or his, so unfortunately I can’t make any claim to mentoring him.  We still share a rooting interest in Maryland’s basketball team, although I still pull for my other alma mater as well, the University of Kentucky Wildcats.

Nowadays, when college students make an in-class presentation, they e-mail themselves their Power-Point document and then open the e-mail on a laptop computer using a wireless network.  The only physical connection involved in the process is that the laptop has to be plugged into a ceiling projector.  

Jim is a college student enrolled in an 8 a.m. history class that he complains interferes with his beer drinking nights, but he has to attend because the professor factors attendance into the overall grade for the course.  Jim is sitting in a classroom over 50 miles away from his university’s main campus and the professor’s lecture is being televised using V-Tel technology.  This is higher education’s version of simulcasting.  One particularly bleak and snowy day in January, Jim is dutifully taking lecture notes on his laptop computer, using Microsoft’s new digital note-taking program, as the professor drones on about obscure happenings leading up to the French Revolution.  At this point, Jim’s mind wanders off to sunny summer days at the racetrack.  He thereupon accesses the university’s wireless network and zaps off an e-mail to a friend, who happens to be online while drinking coffee at Starbucks.  The two of them collaborate back and forth and decide to bet an exacta that afternoon at Aqueduct and a Pick Three that night at Pompano.  By this time, today’s class is about to end.  Jim will use the wireless network at his apartment and Voice-Over-Internet-Protocol to call his betting service to make the wagers.  

By the way, Jim ended up hitting the exacta, losing the Pick Three, and flunking the professor’s next test. 

By one estimate, all of the graduate business students worldwide could be taught by two hundred professors using such distance-learning technologies.  A university in Philadelphia broadcasts a class at 2 p.m. eastern time so that most students in various countries around the globe are able to take part during their normal waking hours.  

A rhetorical question for you:  How many racetracks would it take to supply the world’s demand for simulcasting and account wagering?

Early this week, I received a press release that is titled “Sony Introduces a new digital convergence walkman—It’s a Smartphone Plus.”  It reads:  “Sony Ericsson released a portable walkman that makes phone calls, sends messages, surfs the Internet, and plays songs and video games.  Amidst bullish growth forecasts for the mobile music business, the company hopes that the Walkman can gain some of its old marketing luster.”  Coupled with wireless capabilities, this is the kind of innovation that is changing the world, so to speak.

Down Under, a company called Personal Broadband Australia has a wireless network that spans four cities and one coast region.  This network allows subscribers to send and retrieve e-mail and download web pages at a very high speed (one megabit per second).  As long as a customer remains in the coverage area, the technology works while he or she is traveling in cars or trains and at speeds up to about 60 miles per hour.  Another company, called Unwired Australia, provides subscribers with an external modem whose portability means that it can be switched from computer to computer.  For example, a person could disconnect the modem from his or her office desktop computer and take it home and attach it to a laptop computer--and then access a wireless network.  This kind of emerging wireless broadband technology gives a customer the ability to roam, unlike stationary Wi-Fi.  Cell-phone companies are installing 3G or third-generation networks that allow for the same kind of portability.  Cell phones are getting more sophisticated by leaps and bounds.  For instance, in 2003, cell phones with built-in digital cameras outsold stand-alone digital cameras.

Emerging wireless technologies are the proverbial two-edged sword for anyone offering a product that can be packaged and conveyed over the Internet—such as racing’s retailers, the racetracks.  On the one hand, wireless technologies offer an unprecedented opportunity to interact with customers at almost any time and any place.  Advancements in laptop computers and personal digital assistants, coupled with wireless broadband that is increasingly available in such places as airports, offices, and homes, are reducing the limitations imposed by time and space.  This entrepreneurial environment represents a promising but largely uncharted communications frontier for racetracks.  The potential rewards are huge, but so are the risks.

To continue on with the metaphor of the two-edged sword, the other side of the technological sword is sharp and dangerous, especially from the perspective of incumbent firms like racetracks with heavy investments in bricks-and-mortar facilities.  To illustrate this downside of the wireless revolution, consider a similar example from the personal computer industry having to do with the popularization of the Internet in the late 1990s.  The Internet was a windfall for Dell Computer, but it produced immeasurable problems for Compaq Computer.  Early on, Compaq executives must have been perplexed and even horrified by the Internet.

Michael Dell entered the market for personal computers by adapting a then-radical business model to create a competitive advantage.  Instead of using the conventional bricks-and-mortar, manufacturer-to-distributor-to-retailer channel employed by existing personal computer manufacturers, Dell harnessed telemarketing, mail order, and later the Internet to link directly to customers.  An assemble-to-order manufacturing process and just-in-time inventory enabled Dell to gain a huge cost advantage vis-à-vis his competitors.  

Although Michael Dell did not invent the business model that catapulted his company, he was first to apply it to the personal computer business.  His new approach--based on efficient ordering and distribution processes--allowed a company started by a 19-year-old college student in a dormitory room at the University of Texas in Austin to become number one in the personal computer industry and created shock waves among some of the world’s leading technology leaders, like IBM and Compaq.  Dell’s approach allowed his company to become the fastest in history to reach the Fortune 500 list of largest U. S. corporations and Dell was just named Fortune’s most admired company for 2005.  

Why didn’t Compaq move immediately to follow suit when Dell’s direct-to-consumer approach began to be so successful?  Because, as with all market leaders, Compaq was entangled in conventional business arrangements that were an enormous competitive advantage until Dell came along.  Compaq was a victim, so to speak, of its own past successes.  A business model that works superbly at one point in time can and often does turn out to be an albatross under radically changed market conditions.  In this instance, Compaq’s retail affiliates accurately complained vociferously that if Compaq were to mimic Dell and sell directly to customers, the practice would decimate the affiliates’ business.  While Compaq was working to mitigate this tricky issue, the upstart Dell, which was unencumbered by historical business relationships, was gaining market share at an astonishing rate.

As happened with Dell, telephones, the Internet, and especially wireless broadband are enabling relatively low-cost offshore pari-mutuel operations to lure away some of racetracks’ best customers, who I referred to in a recent Blood-Horse article as Foundation Players, or those people who bet heavily and often.  Enticed by rebates and empowered by communications technologies, Foundation Players aren’t limited to wagering domestically at actual racetracks or U. S.-based betting services. 

A recurring error by executives in firms threatened by emerging technologies is to underestimate the menace because, oftentimes, new technologies are introduced by extremely low profile companies in budding industries.  Until lately, offshore pari-mutuel facilities have not been all that noticeable—kind of out of sight and out of mind.  That is, until worldwide pari-mutuel handle began to increase faster than purses.

The conundrum for an incumbent bricks-and-mortar firm like a racetrack is how to continue to satisfy its current mainstream customers and at the same time cater to technologically-empowered high rolling shoppers for the best deals.  More often than not, top executives in a company imperiled by a developing technology know full well that the situation will only deteriorate if they fail to act.  Even so, for various reasons having to do with not wanting to kill the goose that laid the golden egg, they may not elect to put the company through a wrenching change, or at least not with alacrity.  For example, Polaroid had a prototype for a digital camera in 1992, but by the time it introduced its PDC-2000 mega-pixel camera in 1996 there were already 40 competitors selling digital cameras.

In my judgment, and using a vast amount of industrial history as evidence, racetracks sooner rather than later need to open their own offshore betting locations, or else they will continue to see Foundation Players gravitate to someone else’s offshore company in search of rebates.  Simply put, racetracks cannot let offshore competitors pick off their best customers.  Otherwise, the divergence between worldwide handle on horse racing and purses available for horse owners will grow wider. 

The methodology for establishing offshore betting facilities must be some sort of strategic alliance or joint venture, such as a gain-sharing partnership, between the racetracks and the horse owners.  Companies of all sizes and kinds are forging alliances to enter the vast markets of China and India, so racetracks would hardly be paving new ground.  General Electric, for example, just completed a ten-year strategic plan to attain as much as 60% of its revenue growth from developing countries.  

The big racetrack companies, Churchill Downs and Magna Entertainment, would have one significant cost advantage over stand-alone offshore betting companies in that the simulcast signal from each track in, say, Churchill Downs’ portfolio of tracks could be beamed to Churchill’s offshore facility with little or no charge.  Also, psychologically, customers could be appealed to on the basis that their money is safer in the custody of an offshore entity owned by a well-known racetrack.

A smaller racetrack, with only one domestic location, will need to enter into a strategic alliance with others like itself, so that an attractive portfolio of betting opportunities can be offered by a jointly owned offshore facility.  

Any business that resists innovation in order not to cannibalize its own product and service offerings has sent the equivalent of an engraved invitation to competitors with a killer instinct eager to do it for them.  Just take an historic look at Polaroid, Xerox and a host of other companies that reacted to technological threats by trying to protect their traditional product lines.  

Wireless Internet access can be a great profit-enhancer for racetracks and, at the same time, wireless can be very disruptive, even fatal.  If the former is to be the case, then racetracks must view their markets to be worldwide, rather than domestic.  No longer do a racetrack’s competitors and potentially best customers reside within easy driving distance from the track.  Not in a world with innovative and exciting communications devices and the proliferation of wireless.  

Before I close, permit me a brief digression to direct a retirement story to Fred Noe.  The vignette is about Zoomo, a human cannonball for a circus who was ready to retire and went to see the circus manager, a Mr. Bailey.  Zoomo said, “Mr. Bailey, I’m getting along in years and I’ve had a good career, but I have decided it is time to call it quits at the end of the month.”  Bailey was troubled by this news and he said to Zoomo, “I am sorry to hear that--I don’t know where we are going to find a man of your caliber to take the job.”  Fred, I don’t know where the USTA is going to find a person of your caliber to take the job.

Thank you, ladies and gentlemen.

Mr. Scherf: Our next speaker is from Woodbine Entertainment Group, and following up on Bill’s comments, if there is one thing that you know about Woodbine and David Willmot, they are not going to let anyone serve their customers better than they can. Here to speak about a wireless application that Woodbine has under development is their senior VP of marketing and business development, who has been with them for ten years. Please welcome Nick Eaves.

Mr. Eaves: Thanks very much for the introduction, Chris. I think we are all very interested in Bill’s overview of the general nature of technology and from where it has come, where it is going, sort of a perspective of how it is infiltrated, so to speak, every aspect of life, including the education system, and on it goes from there. That was obviously more of a summary, a general overview, and it would be my intention this morning to speak specifically about a particular wireless wagering application that Woodbine Entertainment has under development called hpibet.com wireless. The last two sessions have spoken about whether or not the racing industry has the vision, the strategy. The fellow from BetFair had the nerve to say that the racing industry needs to develop a strategy. The racing industry does need to develop a strategy, and many of us are in the midst of doing exactly that. The strategy is going to have to take multiple different fronts, and I think one of the key elements is going to be to tie that back to one of the comments that the speaker from Cantor made, which is ultimately all of that enhancement, all of that evolution, whether it is technological or otherwise, needs to, in my view, originate within the racing industry. Those capabilities exist. We have seen it repeatedly in sessions such as these and elsewhere, and ultimately as a group we need to go forward on the basis that we do have the capabilities internally and that ought to be part of our strategy.

          I thought I would start by just quickly running through some of the Horse Player Interactive application. I will move quickly because I know we are behind, but it really is the lead-in to the wireless application that we have under development. Unlike in the US, account wagering is regulated federally in Canada, and in 1982, the criminal code was amended to allow for account wagering across Canada. 

It took us until 1997 to actually launch a product of our own, and we were the Compaq of Bill’s analogy for those years, but certainly it became increasingly clear to us that it would not be our decision to determine how it is customers can participate in our racing product. If the choice was ours, we would much rather that they came to the racetrack, but much like Michael Dell has done, we realized very early on that we had to take that business out to customers irrespective of where they were. So, in 1997, which technologically was a very different time, the first product was an IVR-based telephone account wagering system. You can see some of the points under those telephone services. In our case, there are 257 IVR lines and no tellers. We have a results, scratches, and odds line, which customers can call into and get updated information of that kind. We have a call center that supports those IVR lines in the business, which is open whenever we offer racing. We have a voice recognition based automated deposit system, which is an easy way for customers to fund their account. 

On the phone side of things, on a daily basis, we have about 2,000 customers using the phone system, wagering in the range of $2 million per week. Some of the accompanying online services include WebTote, which is our proprietary online odds and results site. 

We have an online account deposit mechanism called HPI Fund, and online front end of our Horse Player Rewards program, which I will touch on in a moment, as well as free program downloads, a customized website called myweg.com, and free video streaming, which a lot of tracks offer. 

In 1999, we evolved the service, licensed the application to most other racetracks across Canada. Most of those tracks recognized that rather than replicating the infrastructure and the investment to offer an account wagering system, they partnered with us. It is approximately 90 percent of the Canadian market, excluding Quebec, Manitoba, and until yesterday, southern Alberta, and our partner Les has informed me that the whole province of Alberta is now included, so that is a good result. 

In 2000, we launched a player rewards program to award and track those customers who participate in account wagering. It is a fairly conventional program in terms of player loyalty. It is two-tiered. The first is, customers earn points for every dollar wagered, which is not unique. On top of that, we have a second level of the program, in which the foundation players’ Bill referred to, earn additional points based on their level of spending. The lowest level is $5,000 per month, upwards of $15,000 a month is the next one, and those customers get an additional takeout adjustment based on dollars spent. In 2004, that program included just shy of 41,000 customers, tracking 37 percent of total Woodbine Entertainment handle, which was $366 million tracked in 2004, including certain of the partner tracks that participate. That meant 167,000 complimentaries worth just over $3.5 million. 

In 2001, we expanded our HPI TV service, formerly called the Racing Network, which had launched in the late ‘90’s, but it was only on a proprietary satellite basis. In 2001, some additional digital licenses were awarded in Canada, and from that point on, we have been offering two multi-track digital channels and three pay-per-view channels on satellite and digital cable. Between those various mediums, we have just over 400,000 HPI TV subscribers, and those are paid subscribers, as opposed to available universe of viewers, which is an important distinction.

In 2004, we launched the first legal Internet wagering site in Canada called hpibet.com. It is a fully secure site with SSL encription externally and professionally hosted, with what we have experienced so far as 100 percent up time. The design parameters were specific to be sure to support the various other platforms next to be, wireless and beyond that. It really is the jumping off point in terms of us having an online distribution system that, to Bill’s point, reaches absolutely everywhere. The design parameters were pretty straightforward. It is high-speed, because we all know that is what our customers want, and very straightforward navigation. Essentially what our customers told us through focus groups is that if we could replicate a Sam online, that is exactly what they would want. One neat feature is the ability to cue wagers while the customer tracks the odds, so we added that in. Through 2004, on average we had about 850 unique users per day, wagering in the range of about $1.2 million per week. Interestingly, the daily wagering activity per account is 30 percent higher through the Internet application than through the IVR. 

I will show you what the site looks like because what I am going to spend a few minutes talking about is the wireless application. The features of wireless being mobility and individuality do not work very well in a presentation of this sort. I thought what I would do is show you the actual hpibet wired application and then many of the same design elements are in place for the wireless. When a customer logs in, it goes immediately to the track and race page. All of this information is being fed directly from the tote. In the left hand column is the minutes to post. As soon as I click on that, it takes me to the amount and bet type page. On the right hand side, the pari-mutuel ticket populates as those selections are made. I am going to make a ten-dollar bet, and I am pretty conservative, so I am going to pick the favorite. As I made that selection, you saw that the Place Bet icon activated. One of the requirements of regulation in Canada is that you have to have the bet confirmed. So I have to go and accept the bet, and I will get a confirmation saying that bet has been made. So that was a bet made directly into the tote, and that bet could have been made in three or four seconds. All of the functionality that went into the design of the hpibet site originated firstly with focus groups that we conducted with many of our bigger customers, and I told you that the outcome of that was essentially, replicate a Sam online, and that is what we have tried to do here. What I did not mention at the start was that at the top of the screen is the account information. If I go back to the Select Track and Race Page, what is loaded into the application from the tote is all of the racetracks from which the Woodbine hub will be accepting wagers today. It is the tote that is the governor in terms of what is available, when it is available, and the like. If I had more time, I would go through and show you a little bit more about the hpibet application, because it really is helpful in terms of how the wireless has been developed, but I think I would cut too much into Bob Rapp’s time, so I will keep moving on.

Impact on handle, which is what we gauge regularly to get a sense of the decision making and whether we are moving in the right direction. I mentioned that in 1997, the service was launched, and we wagered about $8 million through the application that year. There was steady growth through 1998 and 1999, and in 2000 the rewards program was launched, which resulted in quite a run-up in activity through the account and the first partner track arrangements came into place. In 2001, the HPI TV application was launched, and as we all know, there is a very direct correlation between the ability to see a race and wager on it. That is what we attribute the run-up in 2001 to. In 2004, we launched our hpibet.com application, and in 2005, we have fairly lofty expectations in terms of the contribution from the wireless service itself.

In terms of the opportunity, Rogers Wireless, which is the largest wireless carrier in Canada, provided some stats, which is that in Canada just over 1.25 million wireless devices have web capability and in the US that number is just over 11 million. That tells us that the population, in terms of ability to access a wireless solution is significant. Obviously we were more interested in understanding as it relates to our core base of customers, where they sat in terms of being able to take advantage of this opportunity. Before I run through these numbers, how many people in this room have a wireless device, a cell phone or a pda? That looks like a number higher than the 78 percent that our Horse Player respondents gave us. That number was not a surprise to us. In this day and age, there are not that many people out there who don’t have a wireless device of some description. As it shows here, of our base, 78 percent have a wireless device, another five percent intend to purchase one within the next six months. What we were surprised to see was that 55 percent of those devices are web enabled, which is what you need for this functionality. Some of the other stats that we uncovered, 32 percent of those that have the web capability currently use that feature, 68 percent willing to wager through a wireless device, 59 percent willing to upgrade in order to be able to wager, and 57 percent being very willing to use a loaned wireless device on-track. With those findings through our research, we were emboldened, and we set out to develop our wireless solution. We really came at it from two standpoints. Our research was encouraging. We knew that our base of customers were going to adopt a wireless application, but to the point that has been made repeatedly this morning, we have to look beyond our base of customers and look to what sort of functionality is going to be attractive to a new customer. We have developed two different solutions aimed at different customers. The first is a thin client application, which is accessible through your typical wap-enabled cell phone, and the functionality is modest because of the device, but the selling feature here is distribution. Virtually everybody in this room has a cell phone, and virtually everybody in or out of our audience has a cell phone. By way of distribution, we needed to develop an application that would target those sorts of numbers. The thick client application, on the other hand, is a lot richer. We have developed it based on the Microsoft Windows mobile platform. There are other operating systems out there for wireless, but not surprisingly, Windows is the biggest by far. The architecture that we have rolled out truly is an extension of the hpibet.com infrastructure. Ideally, the application is designed to operate wherever there is a cellular signal. On the thin client side, it is a telephone browser application, which runs over all cellular networks. I touched on the survey results a moment ago, and if you extrapulate those out from our base of 41,000 or so customers, the available universe in terms of customers who can use this is about 15,000, so that is a good starting point for us. It is fairly straightforward in terms of navigation. A simple bet can be made somewhere in the range of about 35 seconds, which is speed that would not be satisfactory for a bigger customer, but again, recognizing that it is meant to deliver on the distribution side, and it is programmed such that after each race, the results can be sent directly to the customer’s cell phone. On the thick client side, which is a little more interesting, it is a lot richer. It is touch screen functionality, very similar to the hpibet.com experience that I showed you a moment ago, on the Windows mobile operating system. The speed is very comparable to what you would find on a Sam machine. It operates both within a wi-fi environment and on a cellular network. Stating the obvious, the performance is dramatically optimized in a wi-fi environment, which is why we have installed one at Woodbine. Again, distribution is critical to the return on an application like this, but we want to provide as complete and as cutting edge a solution to our existing customers irrespective of where they are, on-track or off-track. 

The business model will be that our foundation players will be given these pocket pcs and that gives them full range in terms of mobility of how and where and when they will wager. 

So I will just take you through a couple of screens to give you an idea of how this will work, and I am sorry these are screen captures. Obviously, any registered customer needs to be authenticated by putting in their id, account number, and pin. You can check the Remember Me function to avoid the account number on future sign-ins. Three failed log ins and you get bounced out of the system, and have to be re-activated at the call center. Any non-members who have, just through searching the Internet, found the application, can go in and test it as a guest, but if they are not a signed-up customer they need to go through the hpi account sign up process first. Much the same as the hpibet application, the completion of each screen function automatically takes you to the next screen. Every screen is dynamic, so whatever tracks are entered into the tote are the tracks that are going to appear. The account information appears at the top, which you should be able to see at the top of the device and a customer account name and account balance. Under each track, the race number, the minutes to post to the next race, is displayed, and all of that information is constantly being updated as it goes back and forth between the tote. So in this case, I will select Woodbine Standardbred, and having done that, it would immediately take us to the select race screen, and only races that are available for wagering would show up. If there were a race that had been changed, it would be reflected in the application. In this case, I will select race one, and immediately the bet options for that race show up and you will see again up at the top in the gold ticket area, the bet being built. Unlike on the hpibet Internet application, where you see it in the true pari-mutuel ticket form, because of the real estate of the screen, that is not possible here, but it is the same tracking of the customer decisions as he or she goes through and makes those bets. In this case, we will select a win bet. It automatically takes me through to the denomination screen. The options are consistent with the units on-track (Sam or teller). You can enter your own denomination in the other field. Any amount that is not a valid amount will not be accepted. All of the same logic as you would see on any other device will be seen here. I am a typically conservative Canadian, so we will make a two-dollar wager here. It immediately takes you to the horses screen. All of the entries that are available for that race appear. On the left hand column, you will see the race number show up. The horse number in the program is the next bit of information over. Odds, whether it is the live odds, if it is the next race, or the morning line odds if not, and then horse name. Scratches would be displayed much the same as an hpibet application, but they would be scratched right out and unavailable for wagering. In this case, we will select the two horse, and as soon as I do that, either the cue function or the Place Bet function goes live. As soon as I have entered the required information to actually place a wager, the Place Bet button goes live. Another option for me to act on here would be to cue it, but instead I am going to place this particular bet. I told you about the regulatory requirement in terms of confirming every bet before it is made, so in this case I am going to accept that bet, and the next screen to appear is the Bet Confirmation page. When this comes up, the customer knows that the bet has been accepted by the tote. The account balance is updated. A ticket number is presented so the customer has a record of the wager itself and has a reference number. There are a couple of other options on this screen, one is Repeat Same Bet, which was a bit of a mystery to me, but a really popular feature amongst a lot of our customers. Another piece of functionality that we will add in a different user session is to allow customers to watch a stream of the race whenever it goes live. So by opening up a separate user session, they can see the race. So that is the Bet Confirmation page. There is an alternative setting, which is just a part of the operating system, in this case landscape, particularly for the type of information that we want to display, it is a great way of presenting it. In this case, we have just selected a two-dollar triactor, and we are at the point where, the gold shading is what reflects where we are in the composition of the bet, so we have already made the first two selections of our bet, so we have selected two-three, and we are in the midst of selecting our third entry, the five horse at 5/2. In this case, I am going to cue the bet and this is a feature we added with the original online application, and it works really well with the interval function in our web tote application. It allows customers to build a bet based on whatever logic they are going to apply to building the bet, and then allows them to track the odds, look at the intervals, and make the selection right before post. Another function is the Today’s Bets feature, which you access through view. That will show a record of each of the bets that has been made through this application for that day, and then similarly for race results. If I activate the Race Results option, through view, I can select the date, track, and race that I want to have the results sent to me, and that is exactly what happens. This information is updated every 60 seconds, and the races are available for 14 days. 

In terms of project milestones, we are under development. We started with the customer survey, we developed an implementation plan along the philosophy of measure twice, build once. We really wanted to make sure we knew what we wanted to achieve, so we built a development plan. We submitted that to the Canadian Pari-Mutuel Agency, began the vendor application process, selected a vendor, installed the wi-fi network at Woodbine so it would be ready for launch. At the moment, we are in the middle of the user-acceptance testing. Having gone through application system tests, we are satisfied that it is performing the way it was designed to. The step after user-acceptance is CPMA review, technical audit, with a beta launch in late June. Then if all goes well, we will have a public launch in late July. 

Going back to the comments from the outside, there are different perspectives. We strongly support the model of keeping each of these opportunities and the development of these solutions within the industry. I think the way that application has rolled out in Canada is a good example of how dollars can be invested wisely and the result of that investment and that application can be shared in a way that really does benefit the industry in its entirety. Certainly what Woodbine is looking to do in terms of its model it to extend that partnership application in as many different ways as we can. Certain markets lend themselves very well, in our view, to a similar system, because this really does begin with the wagering customer in mind. In some cases, it can be a full turnkey solution, including the IVR, the hpibet.com application with wireless. In other markets only one or a couple of the individual applications may be relevant, but that is a service that we have had some terrific success with. The wagering increases should speak exactly to that. In the forecasted 2005-2006 lines, we are anticipating fairly meaningful growth, which is a little bit unique. Most of us are not seeing that type of activity on-track, and this is an area where we are going to continue to invest, and we will look to work with as many people who think that is a relevant application to them. If that is of interest, please contact me, and thank you for your attention.

Mr. Scherf: We are almost on schedule, so we can take a question or two, if anybody has one.

Question: What is the estimated pay back time on the investment that it takes to do this?

Mr. Eaves: To fully understand that, we are going to have to understand the result between incremental wagering, from new customers who would not otherwise be with us, and how much we move from other applications. Ultimately, in terms of the development cost that has gone into the wireless piece itself and our wagering forecast, we are looking at between 3 ½ and 4 years on the wireless specific application. The Internet application paid for itself in less than that.

Mr. Scherf: Has the wireless betting begun on-track yet?

Mr. Eaves: No. The wireless network has been installed on-track, and it is ready to go. It is just waiting for an application. We are supporting some of our other wireless services on-track at Woodbine, but because we have not received final regulatory approval, and we have not beta tested, the wireless application is not functioning yet.

Mr. Scherf: I would assume you are going to track, through your player’s program, what impact it has on individual players.

Mr. Eaves: For sure, and as an earlier slide in the presentation showed, as we have made access more achievable and delivered on the functionality the customers have told us that they want, we have been able to see incremental activity from existing horse player customers.

Mr. Scherf: Any other questions? We would like to thank our panelists for this.